New York Regulatory Update

New York Regulatory Update

This article was originally featured on the RDC blog here.

Though medical marijuana has been legal in the state since 2014, recreational cannabis was only recently legalized in New York in 2021. The rollout of recreational cannabis has been slow in New York, but draft regulations were recently released and now the industry is gearing up for licensing.

It is projected that the New York cannabis market could generate more than $1.25 billion in marijuana tax revenue over the next six years. In the meantime, some consumers in New York are buying cannabis from neighboring states with established cannabis markets like Massachusetts.

Other consumers are buying cannabis from dispensaries on tribal lands since Native American tribes in New York are responsible for licensing their own cannabis dispensaries, similar to states like Nevada and Michigan. Additionally, unregulated cannabis “sales” are occurring throughout New York as sellers mark-up the price of items such as smoking accessories, clothing, or other goods and include cannabis as a “free gift” included in the purchase. 

The Office of Cannabis Management will be responsible for managing the programs for recreational and medical cannabis, while the Cannabis Control Board will be regulating licenses. New York officials had previously stated that they intended to reserve as many as half of all licenses for “social and economic equity” applicants, including women, minorities, distressed farmers, veterans and “individuals who have lived in disproportionally impacted communities.” 

In pursuit of this goal, Conditional Adult-Use Dispensary and Cultivator Licenses were announced, and some cultivator licenses have already been awarded. Legal retail sales are expected to begin by the end of the year.

Retail Dispensaries

The state’s recently released Seeding Opportunity Initiative reserves the first round of retail dispensary licenses for individuals and their immediate family members who have been convicted of a marijuana-related offense in New York prior to the signing of the MRTA in 2021. 

These Conditional Adult-Use Retail Dispensary Licenses will only be accessible to qualified equity-entrepreneur applicants with experience owning and operating a business New York. The state intends to support these initial applicants with “renovated or renovation-ready retail locations and wraparound services with dispensaries sited in high-traffic areas.”

Additionally, the New York Social Equity Cannabis Investment Program has been proposed to support the development of these initial retail dispensary facilities. Under this program, the state would also provide support with leasing and constructing dispensaries in prime locations, as well as renovating these facilities to meet health, safety, and security requirements. 

According to the draft regulations, adult-use retail dispensaries must be located within regional geographic zones and applicants may be asked to rank their preferences during the licensing process. The Office of Cannabis Management may select first preferences for regional geographic zones based on the weighted scoring of the evaluation criteria in the application.

The application period for Conditional Adult-Use Retail Dispensary Licenses is expected to open this summer with licenses awarded as soon as early fall. New York regulators have not limited the number of dispensary licenses to be issued and will allow this number to be increased depending on market demand.

State regulators have also implied that the state may not allow “dispensary chains” and would prefer to license single store operators. Though new applicants may not be approved to open chain businesses, already licensed medical marijuana dispensaries in New York will now be allowed to increase to eight locations.

Cultivators

Recently, New York’s Cannabis Control Board approved the first cannabis cultivator licenses. This will allow 52 licensed hemp farmers in the state to transition to growing adult-use cannabis. The state began accepting applications for this Adult-Use Conditional Cultivator License on March 15 and more than 150 hemp farmers submitted applications. Applications that have not yet been approved are still under review and the state will continue to accept applications on a rolling basis.

These newly licensed cannabis cultivators are allowed one acre of flowering canopy outdoors and will likely begin planting soon to ensure harvest this fall. Since growing hemp is very similar to cultivating cannabis, these previously-hemp farmers should be prepared to cultivate the cannabis for the first year of legal retail cannabis sales in New York.

How Can Sapphire Risk Help?

Tony Gallo and the team at Sapphire Risk Advisory Group have experience working with architects and designers like RDC to ensure cannabis businesses are designed compliantly and efficiently. Follow us on social media to stay up to date with the latest New York cannabis news!